Correlation Between Steven Madden and 05526DBJ3

Can any of the company-specific risk be diversified away by investing in both Steven Madden and 05526DBJ3 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steven Madden and 05526DBJ3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steven Madden and BAT CAPITAL P, you can compare the effects of market volatilities on Steven Madden and 05526DBJ3 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steven Madden with a short position of 05526DBJ3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and 05526DBJ3.

Diversification Opportunities for Steven Madden and 05526DBJ3

0.31

Correlation Coefficient

Steven Madden  05526DBJ3

Weak diversification

The 3 months correlation between Steven and 05526DBJ3 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and BAT CAPITAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAT CAPITAL P and Steven Madden is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steven Madden are associated (or correlated) with 05526DBJ3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAT CAPITAL P has no effect on the direction of Steven Madden i.e., Steven Madden and 05526DBJ3 go up and down completely randomly.

Pair Corralation between Steven Madden and 05526DBJ3

Given the investment horizon of 90 days Steven Madden is expected to generate 2.88 times more return on investment than 05526DBJ3. However, Steven Madden is 2.88 times more volatile than BAT CAPITAL P. It trades about -0.02 of its potential returns per unit of risk. BAT CAPITAL P is currently generating about -0.13 per unit of risk. If you would invest  4,561  in Steven Madden on September 13, 2024 and sell it today you would lose (160.00) from holding Steven Madden or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Steven Madden  vs.  BAT CAPITAL P

Steven Madden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Steven Madden is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

BAT CAPITAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAT CAPITAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05526DBJ3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steven Madden and 05526DBJ3

The main advantage of trading using opposite Steven Madden and 05526DBJ3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, 05526DBJ3 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 05526DBJ3 will offset losses from the drop in 05526DBJ3's long position.

The idea behind Steven Madden and BAT CAPITAL P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.